Putting the tarsands* in perspective (*Toronto editor’s headline)

(*Note on headline: This was the Toronto editor’s decision. I always call them the “oil sands”. Tar is a product made from coal. Bitumen (the “oil” in the oil sands) is a form of crude oil.)

As bad as BP’s disastrous oil spill in the Gulf of Mexico is, it’s not clear what long-term effect the spill will have on the public’s attitude towards oil and natural gas in general.

There’s enormous fury directed toward BP. But next in line seems to be the administration of U.S. President Barak Obama rather than Big Oil in general. (I’m talking about the general voting public here, not greenie groups.) One recent poll had U.S. opinion on offshore drilling holding at 60% — in favour! Granted, that was several weeks back. Still, the public seems reluctant to have a generalized meltdown over oil and natural gas.

That should be to the good of Canada and, of course, Alberta. Rather than doubling down opposition to those “dirty” tarsands, the BP spill is more likely to help place the tarsands, and the rest of Canada’s oil and gas industry, in much needed perspective. That is: Canada’s reserves are less risky than deepwater drilling, much easier to keep under control (things tend to be on or beneath the ground) and far easier to contain, repair and remediate when something goes wrong.

Alert readers out there may already be starting to mouth a “Yes, but…” — as in: “Yes, but what about that dreadful killing of 1,500 ducks at Syncrude two years ago?” One tailings pond, on one day — and just look at the damage. What if that kind of thing happened over and over? Actually, it illustrates my point. It’s nothing compared to the havoc wrought by the BP spill.

Environmental apocalypse-wise, Alberta’s oilsands aren’t even C-list celebrities. The Syncrude duck kill had no economic effects — not so much as a single fur trapper was inconvenienced. The duck loss, biologically, was inconsequential. There are 42 million ducks in North America, of which 10 million are shot by hunters ever year. There was no environmental damage. This was a tailings pond — it’s meant to be toxic. Bird-washing costs were minor. The biggest cost was the absurdly detailed investigation by Alberta Environment, whose flunkies seem to have watched too many episodes of CSI: Fort McMurray as they pedantically ascertained that which Syncrude had always admitted: some ducks landed in its pond, the pond is poisonous, the ducks died.

Rather than being the harbinger of things to come, the Syncrude duck kill is the worst thing in the 45-year history of commercial oilsands production. Our worst event, in other words, is an almost immeasurably tiny fraction of one day’s flow from the BP well. The same can be said of Canada’s oil and natural gas industry in general. Environmental standards, emissions tolerances, industry practices and enforcement are being tightened almost continually. One example among many, solution gas — small volumes of methane that come to the surface as a byproduct of oil production — used to be incinerated or just vented into the atmosphere. At thousands of well sites, the industry has either tied in these gas flows for marketable production or used the gas to produce on-site power.

Canada’s energy supply is reliable, secure, long-lived, responsibly managed, close to consuming markets and safe. Those advantages should gradually trickle into the consciousness of our consuming markets to the south. Stunts like the attempted boycott of the oilsands by a number of left-wing U.S. mayors two years ago should fizzle in the face of pressing economic need. Against all odds, the BP spill appears to be one crisis that may not be hijacked by the radical green movement.

By George Koch

This entry was posted
on Tuesday, November 2nd, 2010 at 8:15 am and is filed under Investment Executive.
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